Swiss Re Insurance-Linked Fund Management

Xactanalysis Insights and PCS

Pine River raising capital for reinsurer Pine River Re Ltd.


Interesting news from Bloomberg, reporting last week that hedge fund and institutional asset manager Pine River Capital Management is actively seeking to raise up to $750m for the launch of its own reinsurance firm, Pine River Re Ltd.

Pine River Capital Management is a $14.3 billion hedge fund manager which has had its eye on the reinsurance sector for some time. In 2013, Pine River hired executive and portfolio manager Albert Selius to its team as Insurance Linked Portfolio Manager, who we understand to be managing a growing portfolio of catastrophe bonds and ILS.

It was also reported last year that Pine River Capital Management was interested in starting its own reinsurance firm, potentially by buying hedge fund backed reinsurer SAC Re, although it missed out on that opportunity as it was bought by investors and turned into Hamilton Re.

Looking at the Bermuda public register, two reinsurance entities which both formed on the island on the 28th November 2013 are named Pine River Re Ltd. and Pine River Re Holdings Ltd. It seems safe to assume these are the reinsurance underwriting vehicle and reinsurance holding company that Pine River is seeking to capitalise.

Bloomberg reported that Pine River is looking to raise between $500m and $750m for a reinsurer, which we assume to be the Pine River Re Ltd. vehicle. Bloomberg also reported that Pine River Re is expected to see the return of Bill Jewett, former President of Endurance Specialty Holdings, to the reinsurance sector.

Pine River will likely operate its reinsurer as a permanent capital vehicle for its hedge fund strategy, using the premium float to invest in its strategies to boost the returns of Pine River Re. Reinsurers are seen as a source of capital for funds and in a typical hedge fund reinsurer strategy, the underwriting will often be relatively low volatility, while the investment strategy typically more aggressive than a traditional insurer or reinsurer would undertake.

Investors in Pine River Re Ltd. will then benefit from both profits from the reinsurance premiums written within the business on the liability side, as well as improved returns from Pine River’s supporting investment strategy on the asset side.

We’ll update you as soon as plans for Pine River Re Ltd. are formally announced or confirmed.

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